WILMINGTON, Del. (AP) — Delaware is seeing its first wave of companies who want to balance profits and social consciousness converting to “public benefit corporations.”
The News Journal reports (http://delonline.us/17txl78) that 17 companies took advantage of a new law aimed at these companies on its first day.
Companies like Method, maker of environmentally friendly cleaning sprays, and Plum Organics baby foods, were among the first to sign up when the law went into effect on Thursday.
Delaware was the 20th state to adopt “B corporation” legislation and supporters say it is likely to see more public benefit filings. Observers say the new law appeals to a certain kind of privately held company, and won’t quickly be adopted by corporate giants.
These corporations must balance returns to shareholders, one or more specific public benefits and a positive impact on everyone with a stake, including workers and consumers, according to Andrew Kassoy, co-founder of B Lab, a nonprofit organization that encourages the adoption of public benefits corporation legislation.
If businesses want to have an impact on a larger scale, and gain access to the kind of capital that only large investors can provide, those investors “want the protections and clarity afforded by Delaware law,” he said.
Neil Grimmer, CEO and co-founder of Plum Organics, said converting from a more traditional C corporation to a B corporation in Delaware “was really a natural extension of how we do business.” With the change in corporate status, addressing hunger and malnutrition are now part of the company’s formal mandate. Campbell’s acquired the California-based company a month ago, and Campbell’s was OK with the corporation status change, Grimmer said.
But Delaware lawyer David Swayze says these corporations are “largely a curiosity” and B-corporation structure gives management too much leeway in executing the public benefit mission.
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